China and several EU governments have stopped the White House from releasing a revised version of the OECD global minimum tax plan, after they objected to exemptions that would shield large American companies from parts of the regime.
The pushback has reopened the threat of President Donald Trump bringing back a “revenge tax” on foreign investment if talks collapse, and it has deepened a dispute that has been brewing for months inside the group of 135 countries that signed the deal in 2021.
The fight comes after long negotiations over a G7 decision made in June. That agreement was meant to protect US companies from some parts of the global minimum tax, and it was won by Trump after he warned other countries that he would retaliate if the original design moved ahead.
The carve-outs were meant to calm tensions tied to the Biden-era tax plan, which sought to reduce corporate profit shifting worldwide.
But the plan’s first arm, which deals with where large companies pay tax, has not been applied anywhere. Its second arm, the minimum tax floor, has been resisted inside the US and still has not been put into place by China.
China questions carve-outs, Poland and Czech Republic reject tax‑incentive rules
China raised the first objection when the OECD prepared to publish new text on Wednesday that would have confirmed the G7 revisions, demanding to know why it was not eligible for the same treatment granted to American multinationals.
The planned package also included measures to make compliance easier for companies, and a list describing which tax incentives would meet the new rules. But China’s objections forced the OECD to halt the release entirely.
Poland and the Czech Republic raised their own issues during the negotiations, specifically on the language that set out how tax incentives would be handled, and both said the terms put their governments at a disadvantage. Their concerns added more weight to the growing resistance to Trump’s new carve-out deal.
Estonia then added a wider set of complaints. Jürgen Ligi, Estonia’s finance minister, said the plan could harm Europe at a time when EU governments were moving ahead with reforms while other regions were not. Ligi said the limited tax revenue did not justify the extra bureaucracy on European companies and questioned why Europe should continue working on a framework the US itself had not adopted.
“We have not considered this initiative suitable for Estonia from the very beginning, and even less so now, when the US, who initiated this effort, has declined to implement it themselves,” Ligi said. “I told my US colleague when asked that we do not want anything other than what they want for themselves.”
Talks stall as officials warn the plan is ‘in the ICU’ and Capitol Hill eyes a deadline
People involved in the negotiations said the objections did not end the process outright, but they admitted the delay put the entire timetable at risk. One official described the global minimum tax effort as “in the ICU.”
Another used the phrase “grey smoke,” meaning talks were stuck but not dead.
The stalled publication comes at a moment when governments are scrambling to secure agreement on the new rules and on the US carve-out. If they fail, the entire structure may fall apart.
The issue is being tracked closely in Washington, where Republicans earlier in the year drafted a proposal to impose a “revenge tax” on companies and investors from countries that enforced the original plan without US exemptions.
Lawmakers pulled that threat after the G7 accepted Trump’s push to renegotiate the framework. But with the revised deal now blocked, the risk of that policy returning has grown.
At a congressional hearing this month, Jason Smith, chair of the House Ways and Means Committee, warned that patience was running out. “We have been patient to allow for all negotiating parties to have the space they need to reach agreement, but they must reach agreement,” Smith said.
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Source: https://www.cryptopolitan.com/china-eu-trump-oecd-global-minimum-tax-plan/
